Pension Ruling Favors United Employees Plead for Funds, but Judge Says Default Legal

By Comerford, Mike | Daily Herald (Arlington Heights, IL), May 11, 2005 | Go to article overview

Pension Ruling Favors United Employees Plead for Funds, but Judge Says Default Legal


Comerford, Mike, Daily Herald (Arlington Heights, IL)


Byline: Mike Comerford Daily Herald Business Writer

Loud cheering and clapping erupted in Chicago bankruptcy court Tuesday as the attorney for United Airlines flight attendants union made an emotional appeal for their pensions.

"Without equity there is no justice," said Robert Clayman, his eyes welling up with tears.

Yet later, dead silence filled the courtroom in the Dirksen Federal Building as Judge Eugene Wedoff told the packed courtroom and an overflow room that United Airlines' deal with the government's pension insurance agency is legal.

The ruling effectively opens the door for the elimination of the pension plans of all but United Airlines' pilots, who agreed to a separate deal with the airline. It would be the largest corporate- pension default in American history, and it could leave some United employees with greatly reduced pension benefits.

"The least bad of the available choices here has got to be the one that keeps an airline functioning, that keeps employees being paid," Wedoff told the courtroom, filled mostly with employees of the Elk Grove Township-based airline.

Wedoff attempted to calm tensions at the airline where three of its four largest unions say they may strike if the same judge decides to throw out their already-reduced contracts. A trial on the contracts begins today and lasts until next week.

Nevertheless, heated rhetoric flew freely outside the courtroom, where union members criticized United management for pushing for the latest round of pay and pension cuts.

"Liars, thugs and thieves are at the helm," said Greg Davidovitch, president of the Association of Flight Attendants, based in Rosemont. "Either they go or we go."

Davidovitch estimated that two-thirds of all United flight attendants could lose 50 percent of their pensions or more.

The ruling capped a long day in court, as lawyers for United, its unions, its creditors and the Pension Benefit Guaranty Corp. made their arguments.

The ruling carries broad implications for the industry, with several airlines near bankruptcies of their own. …

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